SAP buys Factory Logic

SAP Acquires Lean Software Developer on Managing Automation

Lean software provider Factory Logic, based in Austin TX, has been purchased by powerhouse SAP (who had been an investor in recent years). Rumor has it that the purchasing price was less than the $30 million+ that was invested in Factory Logic by venture capitalists over the past six years (I don’t feel right quoting the exact rumored number I heard). Not a good investment on their part. That’s the game that VC’s play… you win some and you lose many.

I guess it goes to prove that software customers aren’t the only ones seduced by the siren song of manufacturing software. Sometimes the investors are, as well.

Sometimes the employees are seduced… I was an employee of Factory Logic, 2000-2004. I left Dell after helping start up a new factory and implementing a new production/materials planning process that was built around a very expensive and very customized Factory Planner solution from i2 Technologies.

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Seeing how expensive that was (only a company like Dell could afford that solution), I was drawn to the idea of helping create web-based software that could be cheaper, more customizable, and more effective for factories. Plus, I wanted to try working at a startup and wasn’t thrilled with the culture at Dell, so I made the leap (best done while you’re young, as I was). I had met the founder, Richard Lebovitz, at an entrepreneurship event in Austin and was impressed that he was a lean guy trying to build software as opposed to a software guy looking for a problem to solve.

We did a lot of good work there, both from a software standpoint and a lean perspective, especially with Johnson Controls, our main (and sometimes only) customer. We had software that supported a process and supported people in their daily lean planning work. It’s too bad it didn’t grow more on its own. It sure was frustrating at times, but I also worked with a lot of interesting people and learned quite a bit, both about business, about consulting, and about lean.

I hope that the remaining employees aren’t hurt by the buyout. Best wishes to anyone from Factory Logic who reads this.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an book titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

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